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Bandhan Bank’s Q1 FY26 numbers are out, and they’re a mixed bag. The headline? A steep 65 per cent drop in net profit. But underneath that, there’s more to unpack: Surging retail deposits, stable margins and a healthy capital cushion. While profitability took a hit due to heavy provisioning, some operational metrics suggest the bank might be quietly working on a turnaround.
Q1 FY26 results snapshot
Here’s how the key numbers stack up:
| Metric | Q1 FY26 | Q1 FY25 | YoY change |
|---|---|---|---|
| Net profit | Rs 372 crore | Rs 1,043 crore | - 65 per cent |
| Net interest income (NII) | Rs 2,757 crore | Rs 2,866 crore | - 3.8 per cent |
| Total income | Rs 3,483 crore | Rs 3,527 crore | - 1.2 per cent |
| Operating profit | Rs 1,668 crore | Rs 1,938 crore | - 13.9 per cent |
| Provisions (ex-tax) | Rs 1,147 crore | Rs 523 crore | 119 per cent |
| Gross NPA | 5 per cent | 7.3 per cent | - 230 bps |
| Net NPA | 1.4 per cent | 2.1 per cent | - 70 bps |
| Deposit base | Rs 1.55 lakh crore | Rs 1.33 lakh crore | 16.3 per cent |
| Capital adequacy ratio | 19.4 per cent | 18.3 per cent | ↑ 110 bps |
What’s behind the drop?
- Provisions doubled: The biggest drag on profitability was the spike in provisioning. Bandhan set aside Rs 1,147 crore to cover potential bad loans, more than double last year’s Rs 523 crore. This reflects ongoing stress in its legacy microfinance portfolio.
- NII under pressure: Net interest income fell by nearly 4 per cent, partly due to a shift towards secured lending, which generally yields lower margins.
- Loan book reshuffle: The bank continues to de-risk its book by leaning more on secured retail loans, reducing dependence on microloans.
What’s working well?
- Deposit engine firing: Deposits jumped 16 per cent YoY, led by a 34 per cent surge in retail term deposits. This shows customer trust is intact, even if earnings aren’t.
- Improved asset quality: GNPA and NNPA ratios have improved sharply from a year ago. That’s a big deal for a bank historically seen as vulnerable to credit shocks.
- Strong capital base: With a capital adequacy ratio of 19.4 per cent, Bandhan has more than enough buffer to withstand future stress and fuel growth.
About the bank
Founded in 2001 as a microfinance company and converted into a bank in 2015, Bandhan Bank has a strong rural footprint with a focus on financial inclusion. Its strength lies in lending to underserved customers, particularly in eastern and north-eastern India, while also expanding into housing and retail banking. It now has over 6,300 outlets and 3.3 crore customers.
The takeaway
Bandhan Bank may not be out of the woods yet, but it’s showing signs of cautious optimism. If provisioning normalises and loan growth kicks in, the bank could be back on track. For now, investors will need to stay patient and watch if the retail engine can power its next phase.
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Disclaimer: This is not a stock recommendation. This story was created with the assistance of artificial intelligence and has been reviewed by human experts for accuracy and is intended for informational purposes only. Please take it with a pinch of salt and do your own research or consult a financial advisor before making investment decisions.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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